India: Recent Developments In India-Related International Arbitration

Herbert Smith Freehills has issued the latest edition of its
Indian international arbitration e-bulletin.

In this issue we consider various court decisions, which cover
issues such as the applicability of the Arbitration
Amendment Act 2015, binding
non-signatories to an award, enforcement of an award
before the National Company Law Tribunal, and the continued
pro-arbitration approach of the Indian courts. In
other news, we consider the continued rise of institutional
arbitration in India, a detailed analysis of the
proposed amendments to the Arbitration Act, as
well as India-related bilateral investment treaty
news (and other developments).

CASES

The Supreme Court of India
clarifies the applicability of the Arbitration (Amendment Act),
2015

As reported
here, there has been some confusion within the Indian courts as
to the applicability of the 2015 amendments (the
"Amendments") to the Arbitration and
Conciliation Act 1996 (the "Act") to
pending court proceedings for the enforcement of awards. Section 26
of the Act provided that the amendments would only apply to
arbitrations commenced after 23 October 2015. This resulted in
confusion amongst the various High Courts as to whether the Act
applied to court proceedings filed after the effective date but
where the arbitration was commenced prior to the effective date. In
a recent decision, the Supreme Court clarified in Board of
Control for Cricket in India v Kochi Cricket Pvt.
Ltd1 ("Kochi Cricket")
in March 2018 that – "Section 36 as
amended should apply to Section 34 applications filed before the
commencement of the Amendment Act...". Therefore, the
amendment to section 36 of the Arbitration Act removed the
automatic stay on the enforcement of arbitration awards if a
challenge to enforcement was made under section 34 of the Act was
held to apply even where the arbitration award was made before
October 2015. However, the draft Bill to amend the Arbitration Act
is likely to reverse this position. For more please see
here.

In January 2017, two of Vodafone's UK based companies served
a notice of arbitration under the India-UK BIT (the
"Second Arbitration"). This notice
followed an existing arbitration commenced by Vodafone's Dutch
subsidiary in April 2014 under the India-Netherlands BIT (relating
to the widely reported tax demand of US$ 2 billion on Vodafone by
the Indian tax authorities). The Government of India filed a suit
against Vodafone before the Delhi High Court to argue that a
combination of factors (namely that the UK entities and the Dutch
entity existed in the same vertical corporate chain, both
complaints related to the same tax measures, and that the relief
sought was identical) demonstrated that the Second Arbitration
amounted to an abuse of process and that Vodafone should be
restrained from taking any action pursuant to the Second
Arbitration.

In a continuing trend of pro-arbitration outcomes from the
Indian courts, the Delhi High Court refused to decide whether
Vodafone's commencement of the Second Arbitration was an abuse
of process. In its decision, the court noted that it had
jurisdiction to hear the application, but held that the issue of
whether there had been an abuse of process was a matter for the
arbitral tribunal in the Second Arbitration to decide. A further
discussion of this case is available in our blog post
here.

The Supreme Court of India
allows reference of non-signatories to arbitration

Further to the decisions of Chloro Controls6 and Rakesh S. Kathotia7, in
two recent decisions, the Indian Supreme Court clarified the
grounds on which non-signatories to an arbitration agreement could
be referred to arbitration.

In Cheran Properties Limited v. Kasturi & Sons Ltd.
& Ors. ("Cheran
Properties")8, a non-signatory was made
subject to the arbitration agreement because he was provided with
consideration under a contract on the condition that he would
accept the terms and conditions of the contract containing an
arbitration clause. In Ameet Lalchand Shah and Ors. v. Rishabh
Enterprises and Ors. ("Ameet
Lalchand")9, a party to an agreement which
did not contain an arbitration clause was referred to arbitration
because a related agreement (that the party had entered into)
contained an arbitration clause.

In addition to the primary issue of non-signatories being bound
by arbitration agreement, these judgments are also significant
because they discuss the enforcement and execution of an arbitral
award before the National Company Law Tribunal
(NCLT) (Cheran Properties) and build upon
the jurisprudence (previously discussed here) that a mere allegation of fraud would
not preclude reference to arbitration (Ameet Lalchand).
For more please see
here.

Indian courts settle key
issues relating to enforcement of awards

The Supreme Court of India has resolved important questions on
the interpretation of amendments to the Arbitration Act and
Conciliation Act 1996 ("Arbitration
Act") as regards the enforcement of domestic and
international arbitration awards.

In Kandla Export Corporation v OCI Corporation, the
award debtor sought to rely on a right of appeal under the
Commercial Courts, Commercial Division and Commercial Appellate
Division of High Court Act 2015 Act against an order allowing the
enforcement of a London-issued award, in circumstances where no
right of appeal was available under the Arbitration Act. The Court
decided that, on a proper construction of the relevant legislation,
there was no right of appeal, as to grant a right of appeal would
be contrary to the purpose of the Arbitration Act.

In Sundaram Finance Limited v Abdul Samad, the Supreme
Court clarified that a party could directly apply to the court
which had jurisdiction over the assets subject to enforcement
without having to first apply to transfer a decree from another
court where an application may have been made in relation to the
arbitration agreement. These judgments, and two further important
judgments by the Delhi High Court and Rajasthan High Court relating
to "set-aside" applications and public policy
considerations, are covered in detail here.

Delhi High Court emphasises
reluctance to interfere with decisions of arbitral
tribunals

As we reported earlier this year, in NHAI v M/S.
Bsc-Rbm-Pati Joint Venture, the National Highways Authority of
India challenged an arbitral award rendered in a dispute with a
contractor. The Court upheld the award, noting that the tribunal
was the final arbiter on factual and legal issues, and errors
"which stop short of perversity" must not be
interfered with by the courts. As long as the tribunal's view
was "plausible, and not merely possible" the
courts should not intervene. Similarly in Delhi Metro Rail
Corporation Limited ("DMRC") v Delhi
Airport Metro Express Private Limited, the Court was faced
with a set-aside application by the DMRC in relation to a dispute
arising out of the construction of the Delhi Metro project. The
Court dismissed the application, finding that the Court does not
sit as a court of appeal and is not expected to review the evidence
and pleadings afresh.

NEWS

Increasing impact of
arbitration institutions in India

Nani Palkhivala Arbitration Centre opens a new centre
for arbitration in Delhi

On 20 April 2018, the Nani Palkhivala Arbitration Centre
("NPAC") opened a new centre for
arbitration in Delhi. Established in Chennai in 2005, NPAC was one
of the first arbitration institutions in India. Its centre in
Chennai has overseen institutional arbitrations under its rules,
and has offered administration facilities for ad hoc
arbitrations.

With the opening of its Delhi centre, NPAC becomes the first
Indian arbitration institution to have two centres in the country.
This growth is timely in light of the Sri Krishna Committee Report
(previously covered
here) and other actions being taken by the Government of India
to promote institutional arbitration within India.

Mumbai Centre for International Arbitration
("MCIA") provides arbitration facilities to over
250 hearings as of 25 July 2018

In July 2018, over 50 guests came together in Maxwell Chambers
in Singapore for a breakfast seminar on 'Protecting your
investments in India: Developments in Dispute Resolution',
co-hosted by the MCIA and Herbert Smith Freehills and supported by
Economic Laws Practice ("ELP"). The
panel, comprising Kritika Venugopal (Senior Associate (Disputes),
Singapore), Xinping Chen (Senior Legal Counsel at Accenture, APAC),
Naresh Thacker (Partner, ELP) and Neeti Sachdeva (Secretary General
and Registrar at MCIA), discussed recent developments in Indian
arbitration law and practice, the rise of institutional arbitration
and investment protection in India.

We have previously covered the establishment of the MCIA in
October 2016 as an independent arbitration institution with the
support of the Government of Maharashtra (see here). Herbert Smith
Freehills Partner and Head of the India Disputes Practice, Nicholas
Peacock, was part of the Rules Committee and in 2016 joined the
founding MCIA Council.

As of July 2018, MCIA's arbitration facilities in Mumbai
have been used for over 250 hearings, including at least 1
arbitration pursuant to a contractual clause specifying MCIA rules
arbitration.

Investment Treaty
Updates

Settlement talks underway in
the relation to the Nissan BIT claim

We reported here in February 2018, that car manufacturers
Renault and Nissan had commenced a joint action against the
Government of Tamil Nadu under the India-Japan Comprehensive
Economic Partnership Agreement and that the Tamil Nadu Government
had subsequently sought to prevent the action by way of injunctive
proceedings before the Madras High Court. According to recent reports, the parties have informed the Madras
High Court that settlement talks are underway and that the ongoing
injunctive proceedings should be adjourned pending the outcome of
those discussions.

New BIT claim under
India-Mauritius BIT

Carissa Investments is reported to have filed a claim against
India under the India-Mauritius BIT seeking damages in the order of
US$50 million. The dispute relates to the development of a special
economic zone ("SEZ") (the InduTechZone)
in the state of Telengana, in which Carissa has a 49% interest. The
development of the project is said to have halted because of
investigations into allegations of money laundering against a
senior politician involving the land intended for the new
development. According to news reports, the key allegation in the
legal notice is that the SEZ project has failed to commence given
the pending political and legal issues and that Carissa's
investment has not been suitably protected. According to the Investment Arbitration Reporter, the parties
are in the process of appointing a tribunal.

Tribunal rejects bifurcation
application in RAKIA BIT claim

As reported
here, the Ras Al-Khaimah Investment Authority
("RAKIA") filed a notice for arbitration
under the India-UAE Bilateral Investment Promotion and Protection
Agreement seeking compensation for the revocation of certain mining
licenses. The tribunal is reported to have rejected a request for
bifurcation of proceedings (into a jurisdiction and merits phase)
and the hearing is scheduled for September 2019. The tribunal
comprises Lord Hoffman, Justice CK Prasad (Retired) and William
Rowley QC.

India found to be in breach
of Germany-India BIT

According to this report, a tribunal constituted under the
Germany-India BIT has found that India breached its obligations
under a telecom services contract with Deutsche Telekom. The
dispute relates to the cancellation of a contract between Antrix
Corporation Ltd (a state-owned entity) and Devas Multimedia (a
Deutsche Telekom subsidiary). A further phase to determine the
quantum of damages will follow. The tribunal comprises Daniel
Price, Brigitte Stern and Gabrielle Kaufmann-Kohler as
President.

Further amendments to the Indian
Arbitration Act

As previously reported
here, a draft Bill to amend the Act was passed by the Lower
House of the Indian Parliament on 10 August 2018, namely the
Arbitration and Conciliation (Amendment) Bill, 2018 (the
"Bill"). The key features of the Bill
are to:

establish the Arbitration Council of
India (the "Council"), an independent
body that will amongst other things, frame policies on grading of
arbitral institutions, develop guidelines for the accreditation of
arbitrators, promote the use of arbitration and ADR in India, and
create and maintain a depository of arbitral awards made in India
and abroad;

clarify that the 2015 amendments to
the Arbitration Act will only apply to arbitrations commenced after
23 October 2015 and to court proceedings connected to such with
such arbitrations;

clarify that and the twelve month
time limit to issue an award applies (i) from the date of
completion of pleadings and (ii) does not apply to
international commercial arbitrations;

impose a duty of confidentiality on
arbitrators and arbitral institutions, but will allow for awards to
be published in some form and maintained in an electronic
repository with the Council.

The Bill will now be referred to the Upper House of Parliament
(the Rajya Sabha) and is likely to be considered during the Winter
session of Parliament in November-December 2018.

Update on Daiichi
Sankyo's Enforcement Against Ranbaxy Promoters

We previously reported (
here) on the Delhi High Court's decision to enforce an
international award allowing Daiichi Sankyo to recover INR 3,500
crores from the former Ranbaxy promoters, Malvinder Singh and
Shivinder Singh. By his judgment dated 31 January 2018, a single
Judge of the Delhi High Court upheld the 2016 award of an arbitral
tribunal seated in Singapore.

On 16 February 2018, the Supreme Court rejected the Singhs'
appeal against the Delhi High Court's decision and stated that
"[it was] not inclined to interfere." This
rejection by the Supreme Court seemingly brings an end to the
remedies available to the brothers in India. Since the Supreme
Court's decision, the Delhi High Court has reportedly ordered
the attachment of some of the assets held by the Singh brother. The
Singh brothers have since sought to challenge the award before the
Singapore courts with leading Indian Senior Counsel, (Harish Salve
and Gopal Subramaniam) said to be representing the parties in the
Singapore court.

Observations from the Global
Pound Conference series

The recent 2018 Global Pound Conference (GPC) series brought
together over 4,000 dispute resolution stakeholders, at 28
conferences spanning 24 countries worldwide in a unique and
ambitious initiative to inform how civil and commercial disputes
are resolved in the 21st century. Herbert Smith Freehills is a
global founding sponsor of the series and has worked with PwC and
IMI (International Mediation Institute) to identify key insights
emerging from extensive voting data collected from in-house
counsel.

This year, data gathered during the 2016 and 2017 series was
analysed and four Key Global Themes and four Regional Differences
were observed.

The first theme was that efficiency
is the key priority for parties when choosing which dispute
resolution process to use, which has in particular led to a
questioning of whether traditional adversarial processes
(litigation and arbitration) still meet the needs of end
users.

Second, in-house counsels expect
greater collaboration in interactions with both clients and
opponents in dispute resolutions.

Third, there is growing global
interest in pre-dispute protocols, and particularly the use of
alternative dispute resolution processes such as mediation before
the commencement of proceedings.

Finally, the theme emerging from the
voting data was that, whilst in-house counsel shouldered
significant responsibility to encourage their organisations to
consider a wider range of dispute resolutions more carefully, the
majority view was that external lawyers were the primary obstacles
to change in commercial dispute resolution.

These early insights show the potential of the GPC to inform
global discussions around the future of dispute resolution. The
themes emerging are as relevant to India–related dispute
resolution as to any other jurisdiction. To know more about the
conclusions from the GPC series, please click
here.

Footnotes

1 15 March 2018, Supreme Court of India

2 21 February 2018, Commercial Arbitration petition No.
434 of 2017.

3 14 January 2016, Calcutta High Court

4 27 January 2018, Madras High Court.

5 14 June 2016, Bombay High Court

6 28 September 2012, Supreme Court of India

7 2 July, 2014, Bombay High Court

8 24 April 2018, Supreme Court of India

9 3 May 2018, Supreme Court of India

10 In another recent case, Elite Engineering and
Construction (Hyd.) Private Limited v. Techtrans Construction India
Private Limited (2018) 2 WBLR (SC) 716, the Supreme Court was
of the view that where only certain specific conditions of an
agreement containing an arbitration clause are incorporated by
reference, the parties did not intend for the arbitration clause to
also be incorporated unless specifically incorporated.

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